Where gathering firewood matters: Proximity and forest management effects in hedonic pricing models for rural Nepal

Working Paper No. 115-17

A majority of rural, agricultural households in Nepal rely on forests for firewood and fodder. Access to the forest clearly matters, but might not be as simple as proximity if quality varies by management and property regime. Using two  rounds (2003/2004 and 2010/2011) of nationally representative survey data for rural Nepal, we analyze the impacts of forest proximity and the type of management regimes on housing values. Results from hedonic pricing modelsindicate that when different property rights regimes are ignored, the implicit price of proximity to the forest from where household collects firewood is positive. However, proximity is no longer a significant determinant when the property regime from where a household gathers firewood is considered. Relative to a housing unit that uses a private forest as its primary firewood source, the value of a similar housing unit using a government forest has a 10 percent (2010/11) to 20 percent (2003/04) lower value; the respective percentage reductions for a similar housing unit with community forest source is about 7 to 10 percent. Given limited private forest lands, results offer a measure of support for newly-adopted collaborative and leasehold programs. In the first, government forests are collaboratively managed by local communities with the government, where revenues are shared equally. In the second, degraded government forests are transferred to the rural poor for 40-year terms so that households can conserve and use forest products privately.